Senate Economics Reference Committee: Inquiry into the Scrutiny of Financial Advice
Post Appearance Reply Undertaking
Public Hearing: Wednesday 30th September 2015
Ben Kingsley - Chair of Property Investment Professionals of Australia (PIPA)
Outline of PIPA's recommendation for the introduction of Regulation of Direct Real Property Investment Advice.
Definition of Direct Property:
Direct Property Investment: is the attempt to generate an investment return from either direct residentially zoned, commercially zoned or direct 'other', land, dwelling or combination of each.
The assessment would be based on a Dominant Purpose Test: Whereby the dominant reason to purchase is to attempt to generate investment income via rental income or capital improvements of the Direct Property.
Minimum Standards of Education / Qualification:
New Course - Diploma of Property Investment Planning
Professional Authorised to Provide Property Investment Advice:
Title: Qualified or Accredited Property Investment Adviser - those who have achieved the minimum standard of education qualification - Diploma of Property Investment Planning.
Note: Existing Financial Planners must undertake the Specialisation Models to be authorised to give property investment advice.
Note 2: A Qualified or Accredited Property Investment Adviser - scope of Advice will be limited to Direct Property Investment only
Other Professionals:
Licensed Real Estate "Selling Agents" would be banned from providing Property Investment Advice.
Licensed Real Estate - "Buyers Agents" must complete the Diploma qualification as per other professional and hold qualifications/joint job titles as a Qualified Property Investment Adviser
Joint Qualifications / Job titles would also apply for Accountant, Mortgage Brokers who want to provide Property Investment Advice
Legal / Regulation Framework: (Incorporate into existing framework)
Direct Property to be included & classified as a Financial Product under the Corporations Act.
Regulatory Guide: To be included within the Australian Securities and Investments Commission's (ASIC) Regulatory Guide (RF 146) - Both from a General Advice and Personal Advice undertaking.
Limitation of Personal Property Investment Advice:
PIPA recommends that a Qualified Property Investment Adviser is limited to advice relating to recommendations of:
- Client Property Investment Goals
- Client Risk Profiling
- Property Investment Strategy & Planning
- Purchase Price Range
- Targeted Investment Returns - from a yield and or growth perspective
- Reviews of existing investment properties
We believe the negotiation for purchasing a property is outside the scope of advice in which an adviser can work and it falls within each state's or territory's Real Estate legislation or Act.
Implementation Timeframe:
A target implementation timeframe of 1 July 2017, whereby any Direct Property Investment Advice must only be facilitated by a Diploma Qualified Adviser.
Limitation of Personal Property Investment Advice:
PIPA recommends that a Qualified Property Investment Adviser is limited to advice relating to recommendations on:
- Client Property Investment Goals
- Client Risk Profiling
- Property Investment Strategy & Planning
- Purchase Price Range
- Targeted Investment Returns - from a yield and or growth perspective
- Reviews of existing investment properties
We believe the negotiation for purchasing the property is outside the scope of advice in which an adviser can work and it falls within each state's or territory's Real Estate legislation or Act.
